The Mortgage Market
Stocks rose to a near term high above 10,500 and bond interest rates increased slightly.
The Dollar went sideways, as did gold. But, oil and gasoline were much higher and you can now anticipate increasing gas prices.
Unemployment Rate – stayed at 9.7% for February. How did this happen? Well, the official statistics said that we lost 36,000 more jobs in February, and more people entered the (looking for) work force — BUT, unemployment didn’t change. This statistic stinks. The “Underemployment rate” as officially announced by the government jumped from 16.5% to 16.8% – a more credible change. You can see that unemployed folks are pushed off the count, and pushed onto the underemployed list. However, if you want to really look at the truth – if you measure the unemployment as the US government used to count it – the rate would be over 20%. That’s one if five people who are looking for work of any type. We are truly in a depression from the unemployment point of view.
Census Workers – will join the ranks of employed – pushing this statistic higher in the coming months as the Federal Government will be hiring 1,250,000 people – and of course, they will be laying them off after the Census too – but they don’t talk about that. So, this phony number will become more phony in the future.
Balanced Reporting – I know that I’ve painted a bleak picture in the previous two news items, so I want to balance the picture a little. There is hiring going on out there. Lots of companies are hiring new employees, or are planning on hiring in the near future. This is great news. However, the new gain in jobs is negative – so that’s why I paint a bleak picture. It’s the gross numbers that push the economy around.
Retail Sales – rose 3.7% in February, and this is truly good news for the economy. Consumers are still stingy in what they buy, but they are letting loose of their spare change in greater quantities right now. And this increase was in the face of a a very white winter across America.
Federal Pay – is greater than the equivalent civilian pay for most pay positions. This shows just how screwed up our economy really is. A government job has great security that comes with it, but civilian jobs don’t. Civilian jobs should pay more than governmental jobs. I wonder if any politician has the brass to take on this problem…..
Healthcare Costs UP – and the Obama administration is scratching their head as to why? They will be asking the insurance industry to explain themselves. I can hear the answer now – it is the cost of medicine and hospitals and doctors; not us!!! Of course, the fiasco going on with the healthcare bill doesn’t help, and the government wouldn’t want to think that it might be culpable in the problem.
International Trade – is falling off. If you follow container traffic, you will see that container traffic through the Panama Canal is down anywhere from 15% to 25% annually depending on the port you measure. This is not a good sign with respect to international trade.
Tonight’s Dinner Conversation…… The Mortgage Market
The FED has bought almost $1.25 TRILLION worth of MBS (Mortgage Backed Securities) to keep mortgage rates low. Was this a success in your mind? Well, I have a two pronged answer for you. The FED did keep the mortgage market going – rather than let it collapse with no one able to buy property – and property values collapsing much more than they have — in this case they were successful. However, in keeping mortgage rates low, I consider the FED a failure. I didn’t see mortgage rates going REAL LOW. Yes, they were below 5%, or so if you could find them in your area. But, I remember back in the 60’s when the mortgage rate was in the 3 and low 4 percentage range. So, I think the FED, with all the power in the world, failed to move these rates LOW. The question running around in my mind is “Why? Did the FED fail?”
What about the FDIC? They have acquired MBSs through their acquisition of failed banks. You see when a bank fails, the FDIC appoints another bank to take over, but that other bank doesn’t want “crap” on its books, so the bad stuff goes to the FDIC. The FDIC is going to auction these MBSs off in the open market. This is a ploy to set a price for the “crap.” I don’t think any market price will be set because these sales will come with a “government guarantee.” So how could an MBS with a government guarantee be compared to one without it? I don’t think it can be compared, so most MBSs can’t be priced, and won’t be priced through this maneuver. We are seeing another government maneuver in the financial markets that is going to fail.
What do you think?
Wild Card…..
Brazil is cozying up to Iran, and the US is concerned about it. There could be a lot behind this relationship, but here are the ones that are more obvious:
- Brazil is flexing its sovereign muscles, and telling the world it is the So. American powerhouse – and no one else.
- Brazil could be allowing Iran to open a bank in Brazil to circumvent US sanctions against Iranian banks.
- Brazil is enriching nuclear fuel using a new technology, and Iran undoubtedly wants to get its hands on it.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,566 (up 122)
10 Year Treasury Bond – 3.68% (up 0.05%)
Euro – $1.3622
Gold – $1135 (up $2)
Oil – $81.50 (up $1.58)
Gasoline – $2.27 (up $0.03)
